Anduril Industries has raised another $1.5 billion to build what it calls “a new paradigm in defense production.”
The Series F financing, led by Peter Thiel’s Founders Fund and Sands Capital, boosts the tech-focused defense film’s valuation to $14 billion. It’s planning to use the funds to invest in what it calls “Arsenal,” a software platform that will churn out weapons at a 5-million-square-foot manufacturing facility.
“Anduril is investing our own dollars to hyperscale weapons manufacturing using the same agile, rapid and scalable processes found in the commercial manufacturing sector,” said a statement from the Costa Mesa-based company.
The latest fundraise validates what has become the hottest technology and defense company not only in Orange County, but perhaps the U.S.
The company, which began in 2017, was valued at $8.5 billion in its previous Series E round in late 2022. Co-founder Palmer Luckey in May told the Business Journal that the valuation might top $12 billion.
It’s the second unicorn for Luckey, who sold Oculus VR to Facebook for about $3 billion in 2014.
The Business Journal in July ranked Luckey as the 14th wealthiest in Orange County, with an estimated worth of $5 billion.
Turning 32 years old next month, Luckey is the leader of a new breed of young OC entrepreneurs in the aerospace and defense sector (see stories on pages 1, 32, 33).
His company counted about 3,000 employees as of May, including 888 in Orange County, making it the ninth biggest aerospace and defense contractors with operations here.
Arsenal Rebuild
Luckey often says his goal is for Anduril to “rebuild the arsenal of democracy.”
“As the United States and our allies attempt to gain affordable mass with autonomous systems, weapons and munitions, the defense industrial base must be capable of producing orders of magnitude more than it is currently producing today,” Anduril said in its statement.
Luckey has long made it clear he plans to challenge the lumbering defense sector giants such as RTX Corp. (formerly Raytheon Technologies; NYSE: RTX) and The Boeing Co. (NYSE: BA) with nimble, high-technology weapons distributed in the seas, on land and in the air.
Anduril said its new weapons platform “dismantles the traditional defense production preference for complexity by designing products that are as simple as possible, eliminating unnecessary materials, parts and specialized processes.”
Anduril said it integrates a commercial supply chain wherever possible, a strategy that implies it’s using off-the-shelf non-proprietary components. Nearly 90% of Anduril’s products can be developed and manufactured at hyperscale using commercially available components and materials, it said.
The company is also taking a different path from most defense contractors. Instead of waiting for a contract from the military to build a product, Anduril is investing its own money.
“Anduril is taking on the risk of developing Arsenal by using its own dollars to invest in people, process, tooling, supply chain resiliency and infrastructure,” the company said.
“Anduril is committed to transforming US and allied defense capabilities by combining modern software expertise with a rapid and differentiated approach to hardware development and manufacturing.
“From cutting-edge counter drone systems to extra-large autonomous underwater vehicles, Anduril has proven it can deliver highly-performant, next-generation, software- defined capabilities on a timeline and scale that matters.”
‘Cool’ Defense
Luckey, who won a Business Journal Excellence in Entrepreneurship Award in 2019, likes to say that his technology has made the defense industry “cool,” which in recent years has been shunned by a younger generation in Silicon Valley.
Luckey has said for years that the U.S. military’s potential has fallen way beyond global challengers, especially China.
New investors in the $1.5 billion Series F round include Fidelity Management & Research Company, Counterpoint Global (Morgan Stanley) and Baillie Gifford, as well as “major commitments” from existing investors including Altimeter and Franklin Venture Partners.
Some of them “tend to invest in private companies that are expected to go public within the next few years,” news site Axios said.
While Luckey has said his goal is for his company to go public one day, he said last year the company was not ready for such a step at that time.
In May, the Information website said Anduril had raised more than $2 billion in financing since its founding and that the company told investors it roughly doubled revenue to about $500 million last year.
Anduril’s signature product, Lattice, based on AI, can be used in many robotic products that rely on perceiving surrounding areas. For instance, it allows robotic military submarines to decide, without human intervention, whether to follow a target, try to blow it up or take a different course of action.
Then there are the company’s recently unveiled fighter-like drone and a flying interceptor known as Roadrunner.
The Ukrainian military has been relying on Anduril’s drones in countering Russia’s invasion of that country.
5M-SF+ Facility
Anduril said in the statement it plans to open Arsenal-1, a more than 5-million-square-foot manufacturing facility designed to mass-produce military weapons.
The company didn’t say where it plans to build this large factory. It’s unlikely to be Orange County, where space is limited, nor California, as businesses have cited increasingly onerous regulations, such as Chevron recently announcing a move of its headquarters to Texas.
Anduril already has factories in Georgia, Mississippi and Australia. It recently announced plans for a Rhode Island production facility.
Anduril in 2021 moved its headquarters into a 640,000-square-foot complex of buildings that formerly was the printing press plant for the Los Angeles Times.
Software Arsenal
Anduril calls Arsenal “a software-defined manufacturing platform that is optimized for the mass production of autonomous systems and weapons.”
“The conflict in Ukraine has exposed a critical vulnerability in the United States’ ability to respond to crisis,” Anduril said in its statement.
It said lead times to replenish key weapons and munitions average two years.
“In a major conflict, use of weapons and munitions would quickly exceed supply — it is projected that the United States would run out of weapons in the first few weeks.
“At the same time, the traditional defense industrial base has faced significant challenges in scaling production to meet demands. Slow and low production rates, inflexible processes and the development of exquisite, defense-specific, bespoke systems have hindered the ability to respond quickly to need.”
